Aggregate Planning

1
Aggregate Planning
Professor Ahmadi

2
Planning Tasks and Responsibilities
3
Aggregate Planning

• Provides the quantity and timing of production
  for intermediate future
• Usually 3 to 18 months into future
• Combines (aggregates) production
• Often expressed in common units
• Example Hours, dollars, equivalents (e.g., FTE
  students)
• Involves capacity and demand variables

4
Aggregate Planning Goals

• Meet demand
• Use capacity efficiently
• Meet inventory policy
• Minimize cost
• Labor
• Inventory
• Plant equipment
• Subcontract

5
Aggregate Planning StrategiesPure Strategies

• Capacity Options change capacity
• changing inventory levels
• varying work force size by hiring or layoffs
• varying production capacity through overtime or
  idle time
• subcontracting
• using part-time workers

6
Aggregate Planning StrategiesPure Strategies

• Demand Options change demand
• influencing demand
• backordering during high demand periods
• counterseasonal product mixing

7
The Extremes
Chase Strategy
Level Strategy
Production equals demand
Production rate is constant
8
Aggregate Planning Strategies

• Mixed strategy
• Combines 2 or more aggregate scheduling options
• Level scheduling strategy
• Produce same amount every day
• Keep work force level constant
• Vary non-work force capacity or demand options
• Often results in lowest production costs

9
Aggregate Planning Methods

• Graphical charting techniques
• Popular easy-to-understand
• Trial error approach
• Mathematical approaches
• Transportation method
• Linear decision rule
• Management coefficients model
• Simulation

10
The Graphical Approach to Aggregate Planning

• Forecast the demand for each period
• Determine the capacity for regular time,
  overtime, and subcontracting, for each period
• Determine the labor costs, hiring and firing
  costs, and inventory holding costs
• Consider company policies which may apply to the
  workers or to stock levels
• Develop alternative plans, and examine their
  total costs